Our watch list of winning stock picks for the week is performing as anticipated, with a couple of disappointments. That said, we managed to meet our goal early on Monday. The remaining positions are providing a cushion going into the Tuesday morning session. EDU (+1.09), FB (+0.16), LOGM (+2.90), MOMO (+0.59), TSLA (+2.12) and NVDA (+1.35) are higher again this morning.
Facebook has seen buyers at the 150.00 level for several days. We have a directional bullish position, with a stop if 149.50 is taken out.
Income Trade – Valeant Pharmaceuticals (VRX)
We are interested in trading covered calls on VRX. This stock fits our “winning stock picks” criteria.
- Income premium looking for > $0.50
- Minimum 1.0% return.
- Expiration in 5 days or less.
- Uptrend based on 20MA
- MACD above signal line (trending).
- Open interest for liquidity.
- No earnings announcements
We intend to buy 1000 shares of VRX stock at $14.30 (+/-) and sell 10 option contracts of the 2017 19-MAY 13.5 or 19-MAY 14.00 call option for $0.99 or better (13.50 call). This trade will expire on Friday (4 days) and return more than 1.5% on the 13.50 calls if the stock is assigned at expiration, if nothing changes substantially in the observations noted.
Earnings and Guidance
Analysts have been upbeat about the company’s recent earnings beat and forward guidance.
“With much of the recent weakness in the stock due to the fallout from Pershing Square’s exit, we believe that investors are regaining confidence based on the stability in the quarter.” Further, a sale of the Australian business would help the company achieve debt reduction targets. – Canaccord Genuity
We are also looking at these potential income trades, all of which expire this Friday.
With the markets in a confirmed uptrend, we anticipate many of these trades will be profitable, with few caveats. Be sure to trade sectors that are in play, as we’ve seen recently from the healthcare sector and sub-industry groups, medical devices, biotech and pharmaceuticals.
Happy Trading – Vinny
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